Google is seemingly adamant in its decision to maintain the coveted role of default search engine on iOS, a strategy that could generate nearly $15 billion for Apple in 2021, according to one industry analyst.
The internet search giant is forecast to spend nearly $15 billion over fiscal 2021 for the opportunity, according to a note from Bernstein analyst Toni Sacconaghi, as reported by Philip Elmer-DeWitt’s Apple 3.0 this week. That figure is up from as much as $11 billion in 2020 and up to 9.5 B $ in 2018.
The analysts drew out two potential risks for Google’s payment to Apple, regulatory risk and Google deciding the deal is no longer worth it. Google may end the deal or it may try to renegotiate terms and decrease the amount it pays. The regulatory risk is a 4-5% impact to Apple’s gross profits in case of an adverse ruling.
Apple has been criticized for retaining Google as a search engine over the years, but the company’s senior director of global privacy, Jane Horvath, provided reasons in an interview, that Google was the most popular search engine. Google payments to the company account for Services segment, which helps showcase to its investors that it has more ways to grow revenue and profit.
While Google continues to pay hefty amounts to Apple to retain its search engine in Safari browsers, analysts predict the amount may increase over the years, leaving Google to stop payments or renegotiate the price to be paid with Apple.